Chinese government asked to finance rail link projects worth $6 billion

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Chinese government asked to finance rail link projects worth $6 billion

ISLAMABAD (April 01 2010): Pakistan has requested China to finance Pakistan Railways projects, costing over $6 billion, to develop rail link with Iran, Central Asian States, and European countries in a bid to enhance trade with neighbouring countries, Business Recorder has learnt.

A list of projects, obtained from Railway Ministry, shows that Pakistan is currently negotiating with Chinese government to finance the project 'Construction of new Rail link from Havelian to Khunjrab' costing $3 billion designed to connect China with Europe (EU) through Pakistan, Iran and Turkey. Sources said that the pre-feasibility study had been finalised and submitted to Chinese government for financing. Total track length is 662 km.

Pakistan is also seeking Chinese assistance for 'Construction of Rail link from Gwadar Port to Mastung (Quetta)' costing $1.783 billion for rail link with Central Asian Republics (CAR) through Afghanistan. The other project is 'Up-gradation of Spezand-Taftan Rail link' (608 km) worth $529.4 million for rail traffic with Europe through Iran and Turkey.

A trial container train is already in operation from Islamabad to Istanbul (Turkey) via Iran with transshipment at Iran border due to change of gauge of rolling stock. Construction of Rail link from Peshawar to Jalalabad would cost $155 million and funding request for this project has also been tabled before the Chinese government. Replacement of obsolete signal system from Lodhran to Kotri is also being discussed with Chinese government. It would cost $284 million.

Pakistan Railways has a fleet of 69 Chinese locomotives and the government of Pakistan has placed an order with Chinese suppliers for procurement of 75 more locomotives. "Chinese government may provide technical and financial assistance along with transfer of technology for manufacture of locomotives in future," sources noted.

They said that Pakistan Railway is in dire need of modern high capacity wagons to replace obsolete 4 wheeler wagons. Pakistan Railways is preparing PC-1 for projects for procurement of 2500 high capacity wagons costing $264.7 million, and 1000 high capacity tank wagons worth $140 million. "These wagons are urgently needed for transportation of containers and oil traffic and the government of Pakistan has sought technical and financial assistance along with transfer of technology for manufacture of wagons from China," sources added.

The development of rail through private sector funding, under public private partnership (PPP) mode is being considered a major opportunity for rehabilitation of the rail system in Pakistan which requires investment. "Pakistan has urged China for PPP mode to invest in railway sector as the potential scope for PPP with China in Pakistan Railways is very large," sources added. PPP mode is also possible in non-core activities such as locomotives, coach sleeper manufacturing factories and other sub-sectors like maintenance of track. Pakistan has requested the Chinese government to urge Chinese firms to take part in various projects under PPP mode as they would be provided necessary support and incentives," sources said.

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